Brazil Election Jitters May Hit Investments in 2014

MarineLink.com
Tuesday, April 08, 2014

Brazil's presidential vote will likely delay some investment decisions this year but spending on infrastructure is expected to remain strong, a senior government official told Reuters.

Although President Dilma Rousseff is the favorite to win the Oct. 5 general election, many investors could withhold funds until the next government outlines its plans for the following four years, which could hamper the country's already slow economic growth.

"It is obvious that businesses will delay some investments until after the election to have more clarity," said the official, who asked not to be named because he is not allowed to speak publicly.

"But investment in infrastructure will not be affected because a lot of that construction is already under contract."

The official, who is involved in economic policy decisions, said the government expects investment commitments of about 100 billion reais ($45.48 billion) between 2014 and 2015 in roads, ports, airports, power generation and distribution projects.

That figure was close to $83 billion in 2013.

Rousseff, a left-leaning technocrat, launched a multibillion dollar infrastructure package in 2012 precisely to bolster investment, which is one of the main bottlenecks holding back the economy of the once-booming emerging-market star.

Investments in Brazil jumped 6.3 percent last year, but as percentage of GDP it remains stuck at only 18 percent, which is less than half of China's investment rate.

The central bank cited a sharp drop in investment as one of the reasons it revised down its economic growth forecast to 2 percent in 2014 from 2.3 percent. The economy has expanded on average about 2 percent per year since 2011, a far cry from the 4-percent growth rates of the past decade.

The political climate in Brazil is considered the biggest deterrent for investment after high taxes and red tape in a survey of foreign and local investors released in January by international accounting firm KPMG.

The elections, in which governors and lawmakers will also be elected, already had an impact on the value of local assets.

A drop in Rousseff's popularity in recent weeks helped spark a rally in local stocks. The decline raised hopes among investors that Brazil could see changes in policies that they blame for destroying the market value of state companies and undermining the economy.

The stagnation of investment in Brazil has more to do with a series of business barriers known here as Custo Brasil or "Brazil Cost," which includes high taxes, cumbersome red tape, faulty infrastructure and scarcity of qualified labor.

"Potential investors are asking more questions about political risk in Brazil since the drop in Rousseff's popularity," said Maria Luisa Cravo, investment manager at business promotion agency ApexBrasil.

But ultimately the most important factor holding back investors is not politics but the difficulty of doing business in Brazil, which is undermining the nation's ability to compete.

"There will be a downward trend in direct investment in the next few years due to the Custo Brasil, rising interest rates and the very high cost of labor," she said.

(By Alonso Soto and Luciana Otoni; Additional reporting by Anthony Boadle; Writing by Alonso Soto; Editing by Lisa Shumaker)

 

Maritime Reporter October 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Matson Raises Guam, Micronesia Rates

Matson, Inc., a U.S. carrier in the Pacific, announced today that Matson Navigation Company, Inc. will raise its rates for the company's Guam/Commonwealth of the

Shipbuilding Regulations: Cents and Sensibility

Addressing the Jones Act is just one aspect of an increasingly complicated boatbuilding environment. Stovepiped, poorly conceived regulations is another. The sting of the recession is fading,

Ship Broker Clarkson Looks to Acquire Platou

Top ship broker Clarkson is seeking to acquire Norwegian brokerage and investment bank RS Platou for 281.2 million pounds ($441 million) in a deal that would create

Energy

US House to Hold Hearing on Oil Export Ban

A House of Representatives panel will hold a hearing on Dec. 11 to explore whether a decades-old law that prohibits the export of crude oil makes sense in an era of domestic energy abundance.

Energy’s Promising Future Threatened

Unrealistic Fears and Overstated Risks obscure the benefits of new seismic data. The United States stands poised on the edge of a bright energy future. After decades

Pile Testing for Wikinger Wind Farm Launched

In October 2014 the first phase of the pile testing campaign for the Wikinger offshore wind farm project was launched after the site’s geotechnical investigation on the Baltic Sea had been completed.

News

US House to Hold Hearing on Oil Export Ban

A House of Representatives panel will hold a hearing on Dec. 11 to explore whether a decades-old law that prohibits the export of crude oil makes sense in an era of domestic energy abundance.

Bollinger Delivers 11th FRC to the US Coast Guard

Bollinger Shipyards, Inc. has delivered the William Trump, the 11th Fast Response Cutter (FRC) to the United States Coast Guard.   The announcement was made by Bollinger Chief Operating Officer,

Australian Defence Minister Says Would Not Trust Submarine Firm to Build Canoe

Australia's defence minister has said he would not trust state-owned Australian Submarine Corp (ASC) "to build a canoe", fuelling expectations that most work in

Government Update

US House to Hold Hearing on Oil Export Ban

A House of Representatives panel will hold a hearing on Dec. 11 to explore whether a decades-old law that prohibits the export of crude oil makes sense in an era of domestic energy abundance.

Australian Defence Minister Says Would Not Trust Submarine Firm to Build Canoe

Australia's defence minister has said he would not trust state-owned Australian Submarine Corp (ASC) "to build a canoe", fuelling expectations that most work in

Shipbuilding Regulations: Cents and Sensibility

Addressing the Jones Act is just one aspect of an increasingly complicated boatbuilding environment. Stovepiped, poorly conceived regulations is another. The sting of the recession is fading,

Offshore Energy

Pile Testing for Wikinger Wind Farm Launched

In October 2014 the first phase of the pile testing campaign for the Wikinger offshore wind farm project was launched after the site’s geotechnical investigation on the Baltic Sea had been completed.

Damen, Palfinger Upgrade North Sea Jack-Up Rig

With the support of Palfinger systems JUMP technology, Damen Shiprepair Vlissingen has completed an upgrade of a Keppel Fels ‘N’ Class drilling rig, one of the largest in the North Sea,

Vietnam Warship Visits Underscore Regional Tension

Vietnam on Tuesday showed off its two most powerful warships in the first-ever port call to the Philippines but an official said it was not trying to challenge

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Naval Architecture Navigation Offshore Oil Pod Propulsion Salvage Ship Electronics Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2234 sec (4 req/sec)